Need to Ease 'Goes Away' as Economy Improves: Fed's Plosser

The case for further quantitative easing "goes away" as the U.S. economy improves, Philadelphia Federal Reserve chief Charles Plosser told CNBC Wednesday.

Charlie Plosser
Charlie Plosser

"I want to look at the growth rate of the economy and how that’s doing," he said, and so far he sees an "economy doing better than it was in August" in terms of the unemployment rate, inflation and inflation expectations.

"When there's improvement in every case, then the case goes away for further easing," said Plosser.

His comments came after Fed Chairman Ben Bernankeearlier noted that the "decline in the unemployment rate in the past year has been somewhat more rapid than might have been expected" — remarks the market interpreted as a sign that QE3 wasn't coming anytime soon.

The Federal Reserve completed two such "quantitative easing"programs since 2009, known as QE1 and QE2, in which it bought a combined $2.3 trillion in Treasurys and mortgage-backed securities. The purchases, as well as near-zero interest rates since late 2008, were meant to encourage borrowing, investment and U.S. growth.

Plosser objected to the Federal Reserve putting a date — first 2013, then 2014 — on when it would next raise interest rates.

"In August when we started this practice" of issuing dates "I dissented," Plosser said. "At the end of the day we’ll change policy when the economy tells me it is time to change, and that’s how it should be."

He said he thinks the Fed will likely raise rates before 2014 — maybe even some time in 2012.